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УПРАВЛЕНИЕ № 2 (2) / 2013. 118:93-99
УПРАВЛЕНИЕ ПЕРСОНАЛОМ
УДК 336.71 DOI 10.12737/1982
Барбурски Я.
канд. экон. наук, доцент, Краковский университет экономики (Польша)
e-mail: [email protected]
Barburski J.
Candidate of Economic Sciences, Cracow University of Economics, Poland
e-mail: [email protected]
оценка управления персоналом в банковском секторе в Польше
Аннотация
В настоящей статье представлена оценка хозяйствования одного из наиболее важных факторов развития - человеческого. Эта оценка охватывает банковский сектор в Польше в период 1999— 2011 гг. Статья состоит из введения, двух частей и резюме. В первой части представлены выбранные дефиниции человеческого и интеллектуального капитала в контексте развития организации. Во второй части проведен анализ и оценка данных в сфере уровня занятости, затрат на заработную плату и эффективности работы в банковском секторе в Польше в период 1999—2011 гг.
Ключевые слова:
банковский сектор, макроэкономические факторы (физический капитал, человеческие ресурсы, интеллектуальный капитал), микрофакторы (социально-экономическая и демографическая ситуация, правовые нормы, политическая ситуация).
Assessement of human resources management in the Polish banking sector
Abstract
The paper is devoted to the management evaluation of critically important development driver, i.e. human factor and specifically in the banking sector of Polish economy for the period of 1999—2011. The paper is composed of preamble, two parts and summary. Part I includes selective definitions of "human capital" and "intellectual capital" in the framework of organizational growth. Part II deals with examination and evaluation of data on employment, payroll costs and operational efficiency in the banking sector for the period of 1999—2011.
Keywords:
banking sector, macroeconomic drivers (physical capital, human resources, intellectual capital), microeconomic drivers (socio-economic and demographic situation, legal norms, political situation).
Abstract
The personal factor in a bank's operations involves primarily knowledge, skills, experience, motivation, conduct and attitudes to work, as well as the motivation of the team of people who work in the bank. Building and developing the personal factor both require constant and effective management of human resources. Banks may affect the personal factor, not only by increasing the number of employees but above all by improving employees' knowledge and skills.
The specificity of banks' operations, increasing customer expectations, fierce competition and a changing economic environment mean that among a variety of factors it is the personal factor that is the key element of banks' development. This is also due to the intangible nature of services. The experience and skills of bank employees, their professional knowledge, the ability to properly assess the situation and make rational and responsible decisions determine the economic future of the bank.
As in other countries, the prospects for the development of the banking sector in Poland will depend on the state of the economy. The current global economic crisis necessitates, e.g. reduction in employment costs at banks, both in quantitative and value terms, a solution which by its very nature may be a limiting factor as it will serve to suppress banking staff's motivation to work more efficiently.
Assessing the level of employment in Poland's banking sector, it should be noted that two trends occurred over the analysed period. The first was a downward trend during 1999—2004 and the second involved an upward move in 2004—2010. It should also be noted that throughout the period, a systematic increase in the number of employees per bank was reported. Among performance indicators, a significant decrease in gross financial result per employee in 2009 is worth noting. In the same year, the average monthly salary in the entire banking sector sustained a slight decline, compared to a positive trend in 2006—2008. The rest of the period was characterised by a positive trend.
Introduction
Banks are enterprises pursing a special kind of business which is exposed to various risks. The unique role of banks in the national economy as institutions acting in a fiduciary capacity, as well as the management of mostly non-proprietary funds both require the use of a number of regulations limiting the potential risk with a view to ensuring their economic security and smooth functioning.
The primary function of banks as major actors in the banking sector is considered to involve raising money from different sources and different entities. With its acceptance by the banks, the same commit themselves to protect, store, move and manage such funds. These funds, with the exception of a small part thereof in the form of liquid assets, are used to finance various types of profitable operations.
Undeniably banks operate in a constantly changing business environment, an environment which has become particularly volatile in the recent years. The variability of conditions makes it necessary to follow up developments, analyse them and make important decisions, both small and strategic. These are areas where the human factor is also of crucial importance.
The banking sector is constituted of all banking institutions in the country, which are an important part of its socio-economic infrastructure. It can be said that the economic situation of the banking sector and the economic situation of the country interact mutually. On the one hand, the development trends in the economy, both positive and negative, translate into the performance of the banking sector, and on the other, the banking sector can boost economic growth, or destabilize it.
The banking sector in Poland has been completely reengineered. The biggest changes occurred in the 1990s. It should be noted, though, that despite the fact that it has already achieved a certain maturity, it is still under development and in need of further transformation.
The development of the banking sector is determined by many different factors. These can be divided into macro- and microeconomic ones. The basic macro-economic factors include: the socio- economic and demographic situation, relevant legal regulations, political situation, etc. On the other hand, the main mi-croeconomic factors include financial resources (physical capital), capital resources (financial capital) and human resources (human capital).
The financial capabilities of each bank are best attested to by the size and structure of its liabilities. Unlike other businesses, bank's activity involves handling large amounts of cash. Funds collected by banks are massive pools of money which constantly change in terms of size
and structure. These figures, however, do not prejudge the financial results of a bank or the ultimate success of a bank's activities. Indeed, banks with similar financial resources attain different economic results. The occurrence of a «better or worse» cash structure contributes to the higher or lower revenues, which also leads to differences in efficiency. It is through wise management decisions, particularly lending decisions, that a bank becomes able to develop quickly and be competitive in the market. Taking into account the specificity of banks' operations, and above all the inherent risks, it should be noted that the role of the human factor in banks' business will continue to grow.
This paper aims to present the role of the personal factor, one of most important factors underlying the development of banking operations, with Poland used as an example. It consists of an introduction, two chapters and a summary. The first part introduces the category of «human capital» as an organization s key to development by presenting some of its definitions. The next part of the paper contain an analysis and evaluation of the management of the human factor in quantitative and financial terms, i.e. in the field of employment level, payroll and labour efficiency in Poland's banking sector in 1999-2011.
Human capital as the main factor
in organization development
In the relevant literature, the term «human capital» is often used as exchangeable with the term «intellectual capital»1 and it is indicated as the most important component of company assets. The term «human capital» is most often used in an economic approach and it refers to «knowledge assets» in this case. This approach focuses on the costs and benefits related to the discussed category. G.S. Backer — who published his concept of human capital in the work entitled Human Capital [Becker G. S., 1975] — in turn, treats human resources as part of organization's resources and uses the term «human capital» to refer to them. The concept assumes that the value of work is influenced by employee's qualifications, which can be increased by means of investments in competence. According to Becker, human capital may bring increased profits only when there occurs «competence accumulation», i.e. accumulation of appropriate knowledge and experience. The term «intellectual capital», in turn, is used primarily by management specialists. Irrespective of the use of such a term, the user has the immaterial resources of a company in mind, i.e. the resources, which have no physical or financial dimension
1 Vade — mecum statistique du secteur bancaire, Association Belge des Banques, Bruxelles 1994.
and contribute to the generation of a stream of future profits as well as have significant influence on the value of the company [Dobija D., 2003].
Human capital is inseparably connected to the question of human resources management. Both in organization practice and in the relevant literature, many terms are used to refer to personnel-related activities, such as personnel policy, human resources administration, administration of human resources, personnel management, staff management or human resources management. The terms refer primarily to the activities related to employees and focused on the realization of the objectives of the employing institution (enterprise) and on fulfilling the needs of workers (their development).
When analysing the notion of human capital, one can notice its dual role as a production factor, but also as a source of knowledge of an organization. As a result of education and experience gained during their work, employees acquire skills which can be treated as a production factor, because they are used in the production process. Human capital is also the source of knowledge, which — in its accumulated form — is the source of innovation, and thus it contributes directly to economic growth [Dobija D., 2003].
In their attempts to define intellectual capital, some authors bring up elements, which constitute its components. According to T.A. Steward [1991], intellectual capital is the overall knowledge which consists of such elements as: managers' skills, patents, technologies, information on consumers and suppliers, experience. These are elements which the operation of any company depends on. The definition provided by W.I. Hud-sona [1993] states, in turn, that intellectual capital consists of: the genetic inheritance, education, experience, the attitude towards life and business. Another interesting proposition of identifying the most frequently used categories of incommensurable assets is presented by R. Reilly [1992]. He counts the following resources among them: a) resources based on technology, b) resources related to clients, c) resources related to contracts, d) resources related to data processing, e) resources related to human capital, f) resources related to marketing, g) resources related to location, h) resources related to company value.
The definition of investments in intellectual assets established in 1992 by OECD [OECD, 1992] is a significant step in the discussion on intellectual capital. According to the OECD proposal, investments in intellectual assets cover all long-term investments made by companies and aimed at increasing future results due to other activities than purchase of fixed assets. Definitions
of intellectual capital were developed and made more precise later on.
The definition formulated by M. Croe [2000] is an example of an innovative approach. Among intangible assets, he counts outlays on new, goal-oriented activities or instruments used in a given country and aimed at a quantitative change of or expansion of the existing knowledge, or at acquiring or improving the existing goods, or aimed at acquiring totally new knowledge. This results in the increase of knowledge-related assets, market power and internal power of an organization.
Intellectual capital may also be considered in the context of organization objectives and knowledge management systems. In this approach, it is particularly connected to the ability of a company to realize new ideas, to introduce technological innovations, new products and services on the market, etc. D. Ulrich considers educated, competent employees who realize organization objectives to be the most important component of a company's assets [Ulrich D., 1998]. Similar understanding of intellectual capital is found in resource-based theory of companies. According to D.J. Tecee [1998], a company may acquire a competitive advantage thanks to these assets, which are non-assignable. D.J. Tecee counts location, knowledge and competence among such assets. The author adds that intellectual capital, as it is the source of competitive advantage, is also the source of new values of a company.
2. Analysis and evaluation of the employment level, payroll and labour efficiency in poland's banking sector in 1999-2011.
The headcount in the Polish banking sector varied, ranging from 149,605 (2004) to 181,114 (2008) staff. Over the analysed period, two distinct trends can be seen. In 1999—2004 the headcount decreased from year to year (down 14.39%), while in 2004—2010 an upward trend was manifest. At the end of 2011, the headcount in the banking sector stood at 176,700 and was slightly higher than the 1999 level (by approximately 1.12%). During the analysed period, employment in commercial banks followed the same trend, i.e. prior to 2004, a downward trend was apparent (down 18.47%), which was subsequently followed by an increase. On the other hand, co-operative banks revealed a constant, even if slight increase in employment over the entire analysed period (cf. Figure 1). It should be added that the significant increase in employment in commercial banks and the entire banking sector over the 2004—2008 period was mainly fuelled by good financial results and growth prospects, particularly the expansion of operations associated with a growing demand for household and business loans. Employment increased most noticeably
I I I I I I I I I I I I
■ Banking sector
1 Commercial banks
Co-op erative banks
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Figure 1. Headcount in Poland's banking sector in 1999-2011.
Source: Author's own research on the base: Sytuacja finansowa bankow w 1999 roku (2000, 2002, 2004, 2006), Synteza, NBP, Generalny Inspektorat Nadzoru Bankowego, Warszawa 2000 (2001, 2003, 2005, 2007); Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), Urzqd Komisji Nadzoru Finansowego, Warszawa 2009 (2010, 2011, 2012).
in the fast-growing medium-sized retail banks operating in the mortgage and consumer loans segment.
One of the factors affecting the headcount in the banking sector is the very number of existing banks. Changes in the number of employees, under certain assumptions, should correspond to changes in the number of existing banks. However, analysis of the data shows that the rate of change in employment was significantly ahead of the changes in the number of existing banks, both in the banking sector as a whole and commercial and cooperative banks respectively almost throughout the whole of the analysed period (cf. Figures 2—4). This means a systematic increase in the number of employees per bank.
The role of the human factor in the activities of each bank is most markedly expressed in financial terms. It is clear from a publication of Association Belge des Banques [1994] that it is not material costs, but personnel costs that in some countries are still a major part of the overall cost of the bank. For example, in 1993, they accounted for approximately 62% of overheads in France and approximately 70% in Belgium and Italy. In Poland, personnel costs are lower, which is probably due to the lower general wage level of in our country in comparison with the countries of Western Europe. The wage expense level (including related costs) incurred by the banking sector in Poland in 1999—2011 is presented in Table 1.
Figure 2. Growth in employment levels in the banking sector against the background of changes in the number of banks (1999=100%)
Source: Author's own research on the base: Sytuacja finansowa bankow w 1999 roku (2000, 2002, 2004, 2006), op. cit.; Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), op. cit.
Figure 3. Growth in employment levels in commercial banks against changes in the number of banks (1999 = 100%)
Source: Author's own research on the base: Sytuacja finansowa bankow w 1999 roku (2000, 2002, 2004, 2006), op. cit.; Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), op. cit.
Figure 4. Growth in employment levels in cooperative banks against changes in the number of banks (1999 = 100%)
Source: Author's own research on the base: Sytuacja finansowa bankow w 1999 roku (2000, 2002, 2004, 2006), op. cit.; Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), op. cit.
Given the significant role of personnel costs in total costs, in order to remain competitive and economically efficient each bank must rationalize the costs associated with hired employees. In Poland's banking sector in 1999-2011, the level of wage expenses (including related costs) in relation to a bank's operating costs ranged from 53.68% (2000) to 57.02% (1999). In the case of commercial banks, this share was at a slightly lower level and ranged from 52.11% (2000) to 55.50% (1999). A significant difference in this respect was revealed by co-operative banks, whose wage expense ranged from 70.09% (2011) to 74.86% (1999) of their operating costs. It should be noted that this share changed only slightly throughout the period in question. However, the sig-
nificant differences between co-operative banks and the banking sector in general and commercial banks deserve attention (cf. Table 1 and Figure 5).
Assessment of the effectiveness of the personal factor constitutes a very important aspect of its analysis. Such analyses mostly deploy all manner of measures of labour effectiveness (usually per employee).
Taking into account the average monthly salary in 2006—2011, it can be noted that with the exception of a slight decline in 2009, the salary continued to rise, both in the banking sector as a whole and in commercial banks and cooperative banks respectively (Table 2). Yet, cooperative banks paid approximately 40% less salary than commercial banks. From an economic point of
Table 1
Wage expense vs. operating costs in Poland's banking sector in 1999-2011 (current prices in PLN millions)
Years Banking sector Commercial banks Co-operative banks
Banks' operating costs Wage expense, including related costs Banks' operating costs Wage expense, including related costs Banks' operating costs Wage expense, including related costs
1999 12415,3 7079,7 11439,4 6349,2 976,0 730,6
2000 15365,4 8248,0 14153,3 7375,3 1212,1 872,7
2001 15909,4 8902,3 14544,8 7881,8 1364,6 1020,5
2002 16289,3 8811,0 14850,6 7747,1 1438,7 1063,9
2003 16079,7 8813,6 14620,0 7748,2 1459,7 1065,4
2004 16497,8 9058,7 14952,9 7933,2 1544,9 1125,5
2005 17548,7 9835,7 15898,5 8636,8 1650,3 1198,9
2006 18975,3 10725,6 17233,0 9460,2 1742,3 1265,5
2007 21 771,9 12 277,9 19 092,9 10 550,6 1 944,7 1410,2
2008 24 713,0 13 818,1 21 540,0 11 771,3 2 247,0 1619,5
2009 24 815,0 13 536,0 21 383,0 11 399,8 2 305,0 1 649,7
2010 25 477,0 14 353,1 21 946,0 12 042,4 2 436,0 1 757,6
2011 26 764,0 14 705,0 23 807,7 12 939,5 2 706,9 1 897,2
Source: Sytuacja finansowa bankow w 1999 roku (2000, 2002, 2004, 2006), op. cit.; Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), op. cit. and author's own calculations.
view, this was justified in terms of the value of the assets and gross profit per employee (see Table 2). Analysis of these data shows that in this respect these indicators in both the banking sector and commercial banks were several times higher than the same in cooperative banks. In the case of assets per employee, a clear upward trend in the banking sector and commercial banks can be noted compared to just a small increase thereof in cooperative banks.
Given the size of gross profit per employee, special attention should be paid to 2008, when the indicator tumbled, undoubtedly due to the economic crisis.
The main reason for the strong decline in financial results was a nearly four-fold increase in the negative balance of provisions/write-offs due to the impairment of 0.7 billion PLN in the first quarter of 2008 and 2.6 billion PLN in the first quarter of 2009. As a result, provisions/write-offs accounted for as much as 22.2% of the banks' profit, compared to 6.1% in the corresponding period of the preceding year. Such a large increase was due to the deterioration of the financial situation of some customers as a result of expansion of the financial crisis to the real economy, as well as setting up of provisions for foreign exchange derivative transactions and equity investments in the countries of the region. In
Figure 5. The share of wage expense (with related costs) in the costs incurred by banks (in%)
Source: Author's own research on the base: Sytuacja finansowa bankow w 1999 r. (2000, 2002, 2004, 2006), op. cit.; Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011), op. cit.
Source: Raport o sytuacji bankow w 2008 roku (2009, 2010, 2011)..., op. cit. and author's own calculations.
Table 2
Selected labour efficiency indicators in 2006-2011
Years Banking sector Commercial banks Co-operative banks
Average monthly gross salary in PLN Assets /employee in millions of PLN Gross financial result/ employee in thousands of PLN Average monthly gross salary in PLN Assets /employee in millions of PLN Gross financial result/ employee in thousands of PLN Average monthly gross salary in PLN Assets /employee in millions of PLN Gross financial result/ employee in thousands of PLN
2006 4656,5 4,32 82,50 4997,4 4,86 98,40 2987,1 1,46 21,60
2007 5019,5 4,76 100,10 5386,9 5,33 119,10 3203,2 1,63 28,60
2008 5260,8 5,86 97,45 5591,5 6,61 112,67 3589,2 1,73 34,87
2009 5252,1 6,07 69,96 5604,4 6,85 78,38 3444,8 1,90 26,75
2010 5535,2 6,59 88,78 5903,6 7,46 101,81 3678,1 2,21 30,01
2011 5677,8 7,33 114,07 6129,5 8,40 133,53 3889,3 2,42 36,02
addition to the deterioration in the economic environment, the increase in write-offs resulted from poor risk management — lack of adequate risk assessment in the medium and long term, and lack of stable, long-term sources of growth financing [Informacja o sytuacji..., 2009].
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